- Conditions for enterprises to conduct IPO
According to the Law on Securities of Vietnam, to be listed on the stock exchange, the company must ensure the following conditions:
- From the time of registration for offering shares on the market, the charter capital that the company needs to have is based on a minimum book value of VND 10 billion.
- The operation of the years before IPO registration must be profitable, and by the year of IPO registration must not be losses.
- Plans for issuance and use of capital from IPO must be approved by the General Meeting of Shareholders.
- At least 100 investors (not major shareholders) own at least 15% of the voting shares of the enterprise.
- Before proceeding with the IPO, the majority shareholder must commit to hold at least 20% of the charter capital of the issuer for at least 1 year from the last date of offering.
- It is necessary for a securities company to advise on issuing shares to the public, except for cases where the issuer is a securities company.
- Commit and must list or register for trading shares on the stock exchange system after the end of the offering.
- IPO process
Step 1: Organizations need to get comments from the general meeting of shareholders on the issuance of shares to them. Specific contents for the plan for the initial share issuance should clearly and accurately list ideas such as: purpose of raising capital, amount of capital raised, number of shares issued, objects to which the organization wants to raise capital.
Step 2: After the organization has agreed on the opinions of the General Meeting of Shareholders on issues related to the IPO, the issuer will make a dossier and send it to the State Securities Commission.
Step 3: The prepared issuer dossier will be sent to the State Securities Commission to receive and consider the dossier.
Step 4: After receiving a complete and valid dossier, the State Securities Commission will issue a certificate of registration for public offering of shares to the issuer within 30 days from the date of receipt of the dossier.
Step 5: Upon receipt of the certificate of registration for public offering of shares, within 7 working days, the issuer must publish the notice of issuance in an electronic newspaper or paper newspaper in 3 consecutive issues.
Step 6: When licensed, the securities issuer should announce this in the mass media the official prospectus and the implementation of securities distribution according to the prescribed time.
Step 7: After the end of the distribution, the securities issuer must register, store, transfer and pay for securities. Finally, this organization must report the results of the issuance to the Securities and Exchange Commission, and at the same time need to conduct capital registration with the competent authorities.
- Implications of IPO for businesses
IPO helps businesses affirm their resources and strength, market position as well as successfully position the brand in the minds of consumers, thereby increasing business value, brand value and improving business reputation. This is considered to bring many intangible values to businesses in the process of business development, becoming a stepping stone to serve the merger or acquisition of potential small businesses in the market.
In short, an IPO is a rather complicated financial process but brings many benefits and great significance to businesses. However, not every business should do this. Every enterprise that wants to IPO needs to carefully research and choose an appropriate plan to bring the most effective capital, contributing to improving the development and position of the business.
Above is the content of KALF’s advice on The IPO process and some related legal issues. All of our above advice opinions are based on applicable legal provisions. If you have any questions or requests about legal issues, please contact us for timely answers.
